Mahindra Financial Services Ltd: Reduce M&M Financial, Target Price Rs 160: ICICI Direct

ICICI Direct has a reduced call on & Mahindra Financial Services with a target price of Rs 160 for a duration of 12 months. The current market price of Mahindra & Mahindra Financial Services is Rs 165.15.

Mahindra & Mahindra Financial Services Ltd, incorporated in 1991, is a large cap company with a market capitalization of Rs 20,361.53 Crore, operating in the NBFC sector.

Main products / income segments of Mahindra & Mahindra Financial Services Ltd include interest, fees and other charges, income from sale of stocks and securities, dividends and rental income for the year ending March 31, 2020.

Justification of the investment

According to ICICI Direct, M & M’s financial services business depends on how the rural economy is shaping up and the second wave of Covid-19 has brought new challenges to it. Management has indicated a cautious approach over the next two quarters. Therefore, ICICI Direct believes that the recovery may be slower and that a significant improvement in rates of return may be delayed. RoE is expected to reach modest levels of around 7 percent by FY 23E.

Financial

For the quarter ended 03/31-2021, the company reported total consolidated income of Rs 3,038.37 Crore, up 1.52% from last quarter Total income of Rs 2,992.94 Crore and down by 3.24% compared to same quarter last year Total income of Rs 3140.24 Crore. The company reported after-tax net profit of Rs 204.76 Crore in the last quarter.

Promoter / FII Holdings

The promoters held 51.18% of the company’s capital as of March 31, 2020, while the FIIs held 23.94%, the DII 15.56 and the public and others 9.32%.


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